Y Combinator Moves to Assist Startups Making Hardware

The Silicon Valley accelerator, long known for helping launch software startups such as Airbnb Inc. and Dropbox Inc., has lined up a series of partnerships to assist its hardware entrepreneurs in handling everything from building prototypes to assembling circuit boards.

It is a bid to speed the success of a large and growing wave of hardware companies. Innovations such as 3-D printing, supply chain contractors and new funding platforms have made prototyping, building, marketing and shipping easier, and tech entrepreneurs and the investors backing them are bullish on the sector.

The total amount of venture capital invested in electronics and computer hardware companies hit $2.56 billion in 2014, a record that eclipses the previous high of $2.24 billion in 2000, according to Dow Jones VentureSource. Other efforts, such as hardware-focused accelerators Bolt and Dragon Innovation, are also on the rise.

Bolt announced Wednesday it had closed a second fund at $25 million to bankroll more startups and will be operating its new San Francisco office from Autodesk’s facility at Pier 9. Dragon Innovation last year doubled down on its efforts to advise startups and prepare them for production and institutional funding.

Y Combinator President Sam Altman said he has seen the number of hardware startups increase during the past four or five years, with 15% of the accelerator’s current class of 115 focused on hardware. That increase, along with what he saw as consistent needs, prompted him to strike a series of partnerships to enhance the Y Combinator experience for hardware companies.

“Most have similar problems whether they are in consumer hardware or making nuclear reactors,” Mr. Altman said. “It is difficult to build prototypes and get access to a good shop. Equipment, especially to test radio frequency, is very expensive and difficult to get access to.”

Y Combinator was set to announce Thursday that it is partnering with Bolt, which has agreed to advise Y Combinator hardware companies on product development and manufacturing and provide them access to its new San Francisco office.

Y Combinator also said it has partnered with a group of hardware product and services companies: the Build Shop, the Collaborationist, DIX Metals, Fictiv, Jatco, Novatel, Proto Services, Studio Fathom and Tempo Automation. Y Combinator companies including CircuitHub, Cruise, MadeSolid, Octopart, Pebble, Rigetti, SoundFocus, Tilt and Upverter also will assist current Y Combinator startups.

These partners have offered up access to machines and equipment as well as free and discounted services, ranging from 3-D printing and rapid injection molding to PCB fabrication and assembly, metalworking, design expertise, RF and carrier testing, early access to developer kits, product photography and international scaling.

Y Combinator also said it would build a mini-electronics prototyping shop in Mountain View, Calif., so startups can make quick 3-D prints and other minor operations in a fast and convenient way.

There is no additional fee to Y Combinator startups for these services--they will pay the same 7% equity as their software counterparts, Mr. Altman said.

Founded in 2005, the accelerator said it has backed more than 700 startups that are valued at a combined $30 billion or
more.